HIGHLIGHTS

Supermarket of the future

Inspirations from Expo Milano, the future for grocery and the opportunities ahead.

Perhaps one of the most anticipated events in the world of grocery chains this year was Expo Milano 2015, where countries and organizations gathered to create a vision for a sustainable future.

The carefully crafted thematic routes took visitors through the evolution of food production and consumption, and ended at “The Future Food District,” where a futuristic scene of how people and food interact was laid out. In this vision, the consumer is active and at the center of the food chain, while supermarkets play an essential role in transforming the food culture and introducing new ways of interaction.

Taking inspiration from Expo Milano, here are the opportunities that lie ahead for grocery retailers.

Where sustainable consumption becomes unneglectable
The main theme of the Expo is drawn from a contemporary paradox—on one hand, parts of the world experience starvation and ailments related to lack of food nutrition; on the other hand, other parts of the world suffer from obesity and produce outrageous food waste (approx. 1.3 billion tons per year). We can no longer afford to be unaware of the challenges of growing environmental issues such as climate change, resource depletion, loss of biodiversity, growing population and urbanization.

Until recently, sustainable consumption was seen as a niche, where only a small group of environmentally conscious consumers who believe in the mission to protect the world would trade on price and convenience to buy “responsible consumption” (RC) products. Previously, mainstream businesses were concerned the market was not big enough, and in the face of troubling economic times, would consumers still “walk the talk” of buying RC products? Now, consumers would welcome products produced with a water-saving method, or that can be consumed in a waste-saving way.

Responding to environmental issues will no longer be quota-meeting, corporate citizenship initiative or niche market offering. Consumers will demand sustainability as mainstream.

Where the sharing economy transforms the roles of a producer, retailer and consumer
The Expo’s success is built upon the principles of collaboration and idea sharing. There is a blurry boundary between the creators and spectators, as all contribute to a common purpose—envisioning a sustainable future. In the future, we will expect to see these principles more and more in everyday life, as this relationship and cultural values shift forms the “sharing economy.”

In recent years, Uber and Airbnb stand as the primary successful examples of the sharing or peer-to-peer economy; the companies have built market places to map spare capacity, e.g. rooms, car rides, to those who need it, and thus created a collaborative form of consumption. In the retail context, we see emerging platforms where people can exchange their products (Yerdle, Poshmark), or pay monthly rental subscription to products (Rocksbox—high end jewelry rental). Increasingly, there seems to be a sharing alternative in every corner of retail. As future consumers are finding more satisfaction in gaining experiences, rather than ownership, there will be a greater shift from goods consumption to experience consumption.

In the context of food retail, we see the breakdown of the wall between the consumers and producers. Consumer and producer relationships also shift from transaction-based relationships to participatory relationships, where both parties become more open to each other. Consumers are more active in discovering, making and sharing food ideas and food products. It is less about what the consumer wants and needs, but more about how they are engaged and establish emotional connections along the product life cycle.

It is worth noting that in the sharing economy, this culture shift is based on trust, transparency and deeper social connections. The principles of trust, however, do not necessarily lie in more trust to individuals or to companies. Rather, it is trust in the peer review systems, recommendation and world of mouth.

Where everything is more connected than ever before
At the heart of these changes and future trends is the evolution of technology and the digital age. Over the next five years, sensors, the cloud, connected smart devices and real time analytics will combine to deliver a new layer of connected intelligence that will put in place the mechanisms for new kinds of transactions and revolutionize the ability of consumers to be connected to their products. For example, social media creates a platform for information sharing and experience evaluation; GPS-based services help generate on-demand response to customers’ needs; the Internet of Things (IoT) connects objects and helps predict and prepare for the next customer behavior.

Similarly, the Expo Milano highlighted how consumers would be enabled to connect with the food chain in a more direct and transparent manner. For example, consumers could digitalize their diet management, food preference and health data to be more active at decision making when shopping, or be able to locate where our food comes from. Moreover, devices like smart fridges can interact with smart packaging to help consumers shop and cook easily.

With more knowledge than ever before, consumers will make better and healthier food choices, and discover new products based on their personal needs at every stage of life. This will mean consumers will become more demanding for the right products. With data transparency and sharing of information, the future consumer will also expect producers and retailers to understand them, interact with them as individuals and be good predictors of their behavior. As the Internet of Things breaks down barriers, the roles of consumers would evolve and expand. For example, consumers could bypass retailers and purchase foods directly from manufacturers and many local and niche players.

We have analyzed that the future looks more sustainable, interactive, transparent and more technologically advanced. So, with these trends combined, what does a supermarket of the future look like?

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